Justice News

Intercare Health Systems (Ex-Owner of City of Angels Medical Center) Agrees to
$10 Million Consent Judgment for Medicare and Medi-Cal Fraud Scheme in Los Angeles

WASHINGTON – The United States has obtained a $10 million consent judgment against Intercare Health Systems Inc., formerly doing business as City of Angels Medical Center, for a Medicare and Medi-Cal fraud scheme in Los Angeles, the Justice Department announced today. The consent judgment, which the state of California also joined, resolves a civil lawsuit filed against Intercare by the United States and California in the U.S. District Court for the Central District of California. Also named in the lawsuit were the former owners of Intercare, Robert Bourseau and Rudra Sabaratnam, who entered into $10 million consent judgments in January 2010. The United States is entitled to recover a total of $10 million as a result of the three joint and several consent judgments

The government’s complaint alleged that City of Angels paid "recruiters" employed at homeless shelters in the skid row area of Los Angeles to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether their clients in fact needed or requested such treatment. City of Angels would then bill the Medicare and Medi-Cal programs for a variety of medical services allegedly rendered to the homeless patients, many of which were not medically necessary. This scheme violated the False Claims Act.

The complaint further alleged that payments City of Angels made to its recruiters constituted illegal inducements, or kickbacks. This scheme violated the federal Anti-Kickback Statute, which prohibits certain types of remuneration intended to induce the referral of patients for health services paid for by the federal government.

"Performing unnecessary medical services on homeless people who are struggling to survive is particularly egregious and will not be tolerated," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. "Companies, institutions and individuals will be held accountable for fraudulent conduct that takes money from taxpayers and undermines the integrity of the health care system."

The investigation and civil lawsuit were handled collaboratively by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Central District of California, the Attorney General’s Office of the State of California and the Office of Inspector General of the U.S. Department of Health and Human Services.

This resolution is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Department of Justice has used to recover more than $2.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3.7 billion.